Maintenance grants to end? Maybe not
A BBC article at the end of last week (Student support grants ‘could be cut’) claimed ministers are looking at phasing out students’ maintenance grants as one possible way to cut the budget of the Department for Business, Innovation and Skills (BIS). The Times Higher reports here that grants could become loans (registration/paywall).
But how likely is it to happen?
Policy blog Wonkhe looks at the issue here, and says that while the risk to grants is real, there are a number of equally real reasons not to panic.
The BBC says that removing the grant completely could save £2bn over three years. With no party having promised to protect BIS budgets before the election, and student grants being one of its largest areas of expenditure, they make an attractive target for cuts.
However, the BBC does say that new universities’ minister Jo Johnson is resistant to the idea.
Mark Leach of Wonkhe is quoted by the BBC saying: “I think it’s increasingly likely to happen” although it would place a greater burden on the already-straining loan system. However, it is David Malcolm, Assistant Director at the
National Union of Students, who gives a fuller explanation on Wonkhe’s own site of how it is unlikely to happen – at least, not as a straightforward cut.
The reasons are, broadly:
- Grants have a positive effect on access, and the Conservatives will not want to risk “reinforcing popular perceptions of the Conservatives as more concerned with deficit reduction that supporting the poorest in society,” David Malcolm writes.
- It makes more sense to reduce the thresholds at which grants are paid. This would “reduce the cost whilst allowing the government to claim it was still protecting the very poorest.” This risks alienating the “squeezed middle” who believe their incomes are under attack from all sides.
- “A third option,” Malcom says, “is to freeze the grant rate and the payment thresholds and allow ‘fiscal drag’ to reduce the overall cost – indeed, the thresholds haven’t risen since 2008/09 for this exact reason.” This might not save enough money to satisfy the Treasury, though.
- This Government might steer closer the policy of the last majority Conservative Government which, in 1989, introduced loans to cover living costs with the aim of freezing and reducing grants, and increasing loans to compensate. However, as has been said, there is a problem with increasing the national loan book. Malcolm says this move would mean a rise in the cost of loans, and “making loan repayment conditions less generous would scarcely be more popular than cutting grants.”
- Into the mix comes, today, the release of a report by the Student Funding Panel. This independent panel was established by Universities UK to look at the impact of the 2012 changes to undergrad funding and look at options for reform. The Times Higher Education reports that it “says that should rising government costs in the student loan system be of concern in the short term, then repayment thresholds for graduates could be frozen to offer savings.”
- The THE’s article is here (registration/paywall)
- The Universities UK statement about its panels’ report is here
In its statement today, Universities UK says: “The panel believed that freezing the student loans repayment threshold in the current system for a specified period of time was most likely to achieve the best balance of outcomes for students, graduates, government and universities.”
The report concludes: “The current system of student funding in England is broadly fit for purpose, does not require wholesale reform, and needs to be given time to work.”
Wonkhe says the Student Funding Panel’s report “underlines the argument that reducing the support available would be to make existing problems worse and will hopefully strengthen Johnson’s hand in his negotiations.”
“It would be naïve to think that the grant is safe,” Wonkhe says, but points out that Johnson (a graduate of Modern History at Oxford) “will not want his time in office to be considered either tragedy or farce.”
UPDATE 17 June 2015: The BBC is also warning that the Student Opportunity Allocation, with planned spending of £364m, is under threat from cuts at BIS: www.bbc.co.uk/news/education-33136736
Here’s a passionate plea from someone from a less-well-off background who got to uni only because of a grant: www.theguardian.com/education/2015/jun/15/working-class-students-maintenance-grant-cuts
And here’s a warning to the Government against cutting grants in the Telegraph: www.telegraph.co.uk/finance/personalfinance/borrowing/loans/11671768/University-is-no-longer-a-place-for-the-poor.html
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